Netflix crowns itself king of TV, but loses to 'Fortnite'
Netflix claims to command 10 percent of America's TV time in its latest quarterly report on Thursday, which also called out "Fortnite" as its biggest competitive concern.
The streaming behemoth said fourth-quarter earnings increased 27.4 percent to $4.19 billion, which was slightly below Wall Street analyst forecasts. However, subscriber growth was 8.8 million, beating expectations and bringing its subscriber base to 139.3 million.
"In the U.S., we earn about 10 percent of television screen time," Netflix announced in its shareholder letter, "and less than that of mobile screen time."
Netflix calculated its TV marketshare by estimating 120 million homes watch a billion hours of TV every day in the U.S. Meanwhile, Netflix says its service streams 100 million hours of content every day on average.
In its letter to investors, Netflix delivered some details on how well its highly popular "Bird Box" movie performed, saying in its first four weeks the Sandra Bullock horror film reached 80 million households.
Ted Sarandos, Netflix's chief content officer, talked in an investor interview following the release of results. Sarandos discussed the strategy going forward and where the increased subscriber fees would help with buying original films like "Bird Box." Netflix spent $7.5 billion last year on films and shows and expects to spend more as it commits to producing more original fare versus licensing. Sarandos also teased the sequel to "Bird Box."
"The level of investment that we're doing in our original film space, it definitely changes the economics in terms of licensing films in later windows versus producing films, which is more of a front-loaded cash activity but has a much better payback for us," Sarandos said. "And when you have something like Bird Box, the ability to invest in the next one is all the greater."
Netflix is typically tightlipped about stats related to the audience size of individual shows. The company is coming off a few Hollywood victories with its shows and movies garnering five Golden Globes, including its critically acclaimed hit "Roma."
Netflix seems less concerned about the upcoming launch of Walt Disney's subscription service or a similar service from AT&T's WarnerMedia and more focused on the popularity of "Fortnite" the video game. "We compete with (and lose to) Fortnite more than HBO," the letter to investors said.
Netflix continues to burn money for all its content and still owes $18.7 billion in "content liabilities," which is the debt it takes on to finance its growing library.
This week, the company felt confident enough to raise its rates. The standard plan went form $11 a month to $13, the premium level went from $14 to $16, and the basic package went from $8 to $9.
Netflix forecast $4.5 billion in revenue for the first quarter of this year and the addition of 9 million more subscribers, which would put its total at 148 million.
Netflix shares fell about 2.5 percent to $344 in after-hours trading because of the earnings miss.